“Overfocus” on Money

About 5-10 years ago a friend of mine called me out for being “overfocused” on money. I think that’s a reasonable observation for a person to make about me; even a close friend.

But I think I have a reasonable counterargument. Which of the following two hypothetical people is “overfocused” on money?

  • A person who deliberately saves and invests at an early age (to fully exploit the benefits of compound interest), steadily making their way to financial independence, the point at which any additional money is essentially irrelevant.
  • Or, a person who blows the entirety of each paycheck on triviality, destroying the planet (through consumerism) and their financial future in the process. This person is perpetually worried about when their next paycheck will come, what will happen if they are laid off, and how they are going to pay for the next unexpected car or home repair. This person will work until the age of 90 and die without a penny to their name.

I think it’s reasonable for a bystander to conclude that the diligent planner is “overfocused” on money over the short term; after all, this person geeks out about the lifetime tax savings of investments placed in a Roth IRA in their 20s. But I think the more sophisticated conclusion is that the careless person will spend 10X-1000X more time worrying about money over their lifetime than the diligent planner.

“An ounce of prevention is worth a pound of cure” is a saying that is quite relevant to personal finances. Front-loading the work (financial education, tax planning, expense optimization, etc.) early in life will pave the path for a lifetime of not having to worry about money.

I fully acknowledge that there are diminishing returns to optimization that I probably overreach, but the primary reason I maintain this (tiny) blog is to share lessons learned with internet strangers to amplify the (societal) returns to my invested time. In that sense, it helps to rationalize the relentless optimization that wouldn’t make sense without a sharing mechanism.

The weird truth is that optimization is a fun hobby of mine. Some people crochet. Others play the tuba. Others blow aliens’ heads off with bazookas in computer games. I like to relentlessly optimize; it gives me joy.

Or maybe I’m full of it and need to talk to a shrink….?

18 thoughts on ““Overfocus” on Money”

    • Joey! Haven’t heard from you in a while; hope you’re doing well!

      Not sure where the rant came from; it is apparently the result of 5-10 years of that comment festering inside of my head. Perhaps I really do need to talk to a shrink!

  1. Hi Professor!

    My basic question is: How do you optimize your money for happiness throughout life?

    I agree that blowing a paycheck on trivial items is wasteful. However, saving money to enjoy a day that you may never live to see is presumptive.

    How do you balance spending money on activities you enjoy now while saving to enjoy the future. Essentially, what criteria do you think of when determining whether an activity or item is worth spending money on?

    I want to save for my future, but not let life pass me by. Any thoughts? Thanks!

    • Good questions. Certainly above my pay grade, but I’ll take a stab.

      I’ve found that more spending does not equal more happiness. I’ve found that more free time makes me more happy (though there are admittedly diminishing marginal benefits of leisure time). I’ve also found that more of a savings cushion makes me feel more secure.

      Therefore, I follow pursuits that align with my values; mainly, I strive to spend as much of my life as possible sleeping on the ground in the middle of remote wilderness. Given my current family/work/geographical constraints, I’m not sleeping outside as much as I’d like to but every additional dollar saved is another dollar (with interest) of future freedom.

      I acknowledge that others derive true joy out of the perfect haircut, or the perfect dress, or the perfect car. I’m glad I’m not one of those people. I think that more often that not, people are who assert that more spending makes them more happy are simply chasing their tails on the hedonic treadmill. I fully acknowledge that these assertions are true only for the first world; it’s abundantly clear that in the developing world more spending (on food, healthcare, education, housing) will lead to higher happiness.

    • I think the newer version of I will teach you to be rich does a decent job flirting with that idea….

      IMO (and this is probably similiar to what that book says, i think it was the best part of it) but it’s good to splurge on things you love that also are positive/productive (it’s bad news to go broke on booze, etc.)

      Some examples: I’m a big health/fitness nut and spend a lot of money on grass feed beef, heritage pork, fresh wild salmon, cage free eggs, a local CSA for produce and organic this that and the other thing. I also love my wife and kids and don’t mind investing pretty pennies on things that bring us together and try to do that often.

      but I’m not a big car guy so you won’t see a tesla in my driveway, etc. and I’m not a huge fan of tech so up until a few months ago I was using a 6 year old windows smartphone held together by packing tape and my TV is near 15 years old and has had 3 broken input port things from when my kids were little but I do have some pretty high quality speakers with a 50lbs subwoofer (it makes me chuckle when my little old house rumbles during movies) because I love listening to music.

    • I think it’s all about spending within your means. When I was in high school and college,I bought the cheap but semi-reliable used car and ate instant Ramen noodles a lot since I was already going into debt to pay for my engineering degree. Once I graduated, I was able to upgrade to a slightly better used car that was a bit sporty (5 year old Toyota Celica). After getting out of debt, I bought a new Mustang (with few options … declined the power windows/seats, etc) so that I could get a nice new car with the desired color and style. As we progressed in wealth and savings, we bought new Acura and Lexus cars (in cash) since we had a nice nest egg of savings/investments and our house was practically paid off. We’re looking at a new Benz now since we’re ahead in our retirement savings plan. Point being that as long as you budget for things you like even if impractical (e.g. we do like new cars) buy it as long as the long-term goals stay in check. It’s simple budgeting and living below/within your means consistently yet not be too cheap. If you develop that discipline early and stick to it, we’ve found you can up the silly spending accordingly.

      • As I grow older, one counter-intuitive thing I’ve realized is that buying quality products is more economical than going cheapo. “Buy nice or by twice” rings true to me.

        From here on out, I think I’m only going to buy new cars and drive them to the ground.

        • Agree this is true for many things but it’s really hard to convince most folks that a new Benz is worth 2-3 times the value of a new “comparable” Toyota. You got to have lots of disposable assets to justify that little extra luxury of the Benz. I don’t regret being frugal earlier in life so I can spend “dumb” today.

  2. I think the dichotomy you propose ignores the hypothetical person that your friend had in mind: the one who is steadily making their way to FI, and nevertheless perpetually “worries” about money.

    • That’s a fair point. I don’t think that’s what the original friend had in mind, but perhaps that’s what another observer (like yourself) might conclude. Perhaps I’ll ask him what he meant.

      I think this may have been a fair characterization of my past behavior but I’m slowly graduating from that.

  3. Don’t worry. We are all crazy and would benefit from therapy. And anyone who disagrees with that is likely super crazy.

    There are about a million and one worse things you could do with your free time than unpack Roth tax implications, etc.

  4. I too enjoy the constant optimization. To me it’s a game. I enjoy doing my taxes (no joy in paying them, mind you) almost as much as other’s might enjoy putting together a puzzle. I like to understand how it works. I get that most people think that’s crazy, but that’s how I’m wired. Probably something that ties back to growing up with my family never having enough money and living on the edge of subsistence.

    • I think you and I are a lot alike. It’s kind of eerie.

      I guess the one difference between you and me is that my love of optimization wasn’t driven by scarcity growing up; rather, it was motivated by the inefficiency I observed. When I was in my early teens, my grandfather treated our family to a $100/plate Thanksgiving meal at a fancy restaurant. At the time I was making minimum wage of around $6/hr or so, so this translated to something like 17 hours of work for me. I remember thinking to myself back then that it was absurd to spend that much money on a single meal; I would have much preferred to eat a PB&J and pocketed the $100 to invest. In both scenarios, the $100 meal or the $0.50 PB&J, the effect is the same – a full belly.

      Not much has changed about my mentality over the ensuing 25Y.


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